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Display Display Components Components Philippe Combes Philippe Combes Executive Vice President Philips Components Executive Vice President Philips Components CEO Business Group Display Components CEO Business Group Display Components

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DisplayDisplayComponentsComponents

Philippe CombesPhilippe CombesExecutive Vice President Philips ComponentsExecutive Vice President Philips Components

CEO Business Group Display ComponentsCEO Business Group Display Components

We will reinforce our leading position

and grasp high growth and high

value added business opportunities!

• We are number 1 in color picture tubes

• We have the power of innovation

• The Plasma market offers bright perspectives

• We constantly drive towards cost leadership

• We deliver high customer service

• We focus on fast growing segments

Display Components - the Key MessagesDisplay Components - the Key Messages

Television TubesTelevision Tubes

Plasma Display Panels (PDP)Plasma Display Panels (PDP)

Monitor TubesMonitor Tubes

It’s great to be a leader in display!It’s great to be a leader in display!

ContentsContents

• Market Overview

• Current position

• Our future strategy– Cathode Ray Tube (CRT)– Plasma Display Panels (PDP)

• Summary

0

50

100

150

200

250

300

350

400

450

1999 2000 2001 2002 2003 2004

CRTCRT

Display Market14” - 40” [mill units]

Plasma &Projection <40”

Plasma &Plasma &Projection <40”Projection <40”

Desktop LCDDesktop LCDDesktop LCD

NotebookNotebookNotebook

CRTMonitor Market

CRTCRTMonitor MarketMonitor Market

CRT Television Market

CRT CRT Television MarketTelevision Market

an exciting technology, capturing the high volume of the marketan exciting technology, capturing the high volume of the market

CRTCRT

CRT will remain a tough competitor for new technologies

Source: Philips BI

2004

Volume Value

9%9%

36%

35%35%

20%20%

29%29%

43%

20%20%

8%8%0

50

100

150

200

1999 2000 2001 2002 2003 2004

30”-40”

Global TV CRT market

Millionunits

Jumbo

Small

Medium

Large

In TV tubes, the Jumbo segment is the fastest growingIn TV tubes, the Jumbo segment is the fastest growing

TV tube market developmentsTV tube market developments

• The television tube market is growing with an average of 4.8 %CAGR 2000-2004 in value

– The Jumbo segment has the strongest value growth ( > 14%).

• Innovation rate will increase to satisfy consumer trends triggeredby alternative technologies (flat, slim, high resolution).

• Main growth areas are China and Europe

• Supply demand is becoming balanced in all segments

• Allowing prices for small and medium size tubes to increase,restoring attractiveness to this segment

Source: Philips BI

In Monitor tubes, 17” will be the dominant sizeIn Monitor tubes, 17” will be the dominant size

0

50

100

150

200

1999 2000 2001 2002 2003 2004

>20">20"

19"19"

17"17"

15"15"

14"14"

Millionunits

Global monitor CRT market

Monitor tube market developmentsMonitor tube market developments

• PC market showing continuous volume growth of more than 10%per year

• The trend is large, slim and flat !

• Color CRT monitors continue to dominate the desktop display market

• China will be the largest market for Monitor CRTs

• Supply-demand getting in balance in 2002, one year earlier thanpreviously forecasted. Allowing for prices to recover

• Due to the penetration of LCD, the monitor tube market is expectedto reach its peak around 2006 / 2007

ContentsContents

• Market Overview

• Current position

• Our future strategy– Cathode Ray Tube (CRT)– Plasma Display Panels (PDP)

• Summary

Nr 1 in television CRTs (18% World Wide)

Nr 5 in monitor CRTs (9% World Wide)

0%

5%

10%

15%

20%

PhilipsThomson

SonyMatsushita

Samsung LG0%

5%

10%

15%

20%

Samsung

CPT

LG

Sony

Philips

Hitachi

Mar

ket s

hare

(va

lue)

Source: Philips BI

We are the leader in TV tubes!We are the leader in TV tubes!

Our customers include the world’s market- and innovation-leadersOur customers include the world’s market- and innovation-leaders

The 2000 European TV of the Year is usingThe 2000 European TV of the Year is using Cybertube Cybertube

EuropeAmericasAmericas

AsiaAsia

20002000

19951995

EuropeAmericasAmericas

AsiaAsia

Our global presence is uniquely balanced!Our global presence is uniquely balanced!

This is supported by our local industrial base.

We have been able to manage strong price decreasesWe have been able to manage strong price decreases

Index

50

60

70

80

90

100

110

1996 1997 1998 1999 2000

Price

Cost

TV tube 14 inch

ContentsContents

• Market Overview

• Current position

• Our future strategy– Cathode Ray Tube (CRT)– Plasma Display Panels (PDP)

• Summary

We will grasp high growth and high value addedWe will grasp high growth and high value addedbusiness opportunities in our display marketbusiness opportunities in our display market

Focus on

– Winning customers through innovation andcustomer intimacy

– High growth segments: Jumbo expansion

– Cost competitiveness

0

1

2

3

4

5

6

1997 1998 1999 2000 2001 2002 2003 20040

20

40

60

80

100

120

140

1997 1998 1999 2000 2001 2002 2003 20040.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

R&D in mill Euro

CRT Sales CRT R&D spending

Sal

es [

B E

uro

]

R&

D s

pen

din

g [

Mill

Eu

ro]

R&

D s

pen

din

g [

% o

f sa

les]

Our sales growth is built on our R&D investmentsOur sales growth is built on our R&D investments

R&D percentage of sales

To grow, we focus on big, flat, slim and high resolutionTo grow, we focus on big, flat, slim and high resolution

Our flat solution allows for fast and cheap implementation!

Rolling out our unique flat technology - Rolling out our unique flat technology - CybertubeCybertube

Sony WegaPhilips

Picture Flatness Impression

DepthAll competitors at similar depth

Drop Test (neck down)AG gives betterperformance but others areat threshold level for RF

Drop Test (E/W)AG gives worse performance

MicrophonyGPM technology provides bestin class performance due tostrength of shadow mask

Magnetic Shielding

WeightLowest weight due tomedium glass wedge&CHSC

Off-state flatnessimpression

++

+

0

-

--

Using e-tools to optimize our supply chain and customer intimacyUsing e-tools to optimize our supply chain and customer intimacy

• Electronic Key Account Management (ek@m TM)– Customer intimacy– Supply chain integration– Quality excellence

• eProcurement– B2B integration for strategic bill of materials– eCo-design with key suppliers– Ariba implementation for non product related purchases

We capture the growth in jumboWe capture the growth in jumbo

Taiwan

USA

Brazil

W-Europe

by investing in cost competitive locations

China2 lines

Central-Europe3 lines

Mexico2 lines

CRT site where lines will be addedOther CRT sites

Jumbo salesJumbo sales

20002000 20042004

24% market share in jumbo TV tubes by 2004 (value)24% market share in jumbo TV tubes by 2004 (value)

smallsmall

mediummedium

largelargejumbojumbo

smallsmall

mediummedium

largelargejumbojumbo

Revenues per SegmentRevenues per Segment

Central-Europe

USA

Brazil

Mexico

ChinaW-Europe

CRT sites

5 lines‘00-’02 5 lines

‘00-’011 line‘00-’01

We have accelerated our restructuring effortWe have accelerated our restructuring effort

Taiwan

Moving large and jumbo to future customer locations

ContentsContents

• Market Overview

• Current position

• Our future strategy– Cathode Ray Tube (CRT)– Plasma Display Panels (PDP)

• Summary

Plasma is a consumer dream come truePlasma is a consumer dream come true

“A picture on the wall”

0

1

2

3

4

5

6

7

8

9

1998 2000 2002 2004 2006 2008

PDP Market[mill units]

Source: Philips BI

A promising technology with high growth potentialA promising technology with high growth potential

PDP market developmentsPDP market developments

• The 1999 biggest markets are Europe and North America

• At current price levels the main market is businessapplication

• Market studies reveal that wall hanging televisions are veryappealing to the consumers

• As prices will come down, the consumer market will develop

Our PDP Business ModelOur PDP Business Model

• We will support Philips Consumer Electronics in their ambitionsin the Plasma market

• We will do this by concentrating on the panel module assemblyand leveraging our in-house knowledge in– pixel structure simulation and addressing– digital signal processing– semiconductors

• We will purchase our parts from leading suppliers, enabling usto develop the business with limited investments and maintainflexibility.

• We will maximize value creation, while minimizing financial risk

ContentsContents

• Market Overview

• Current position

• Our future strategy– Cathode Ray Tube (CRT)– Plasma Display Panels (PDP)

• Summary

• We are number 1 in color picture tubes

• We have the power of innovation

• We constantly drive towards cost leadership

• We focus on fast growing segments

The CRT is an exciting business with growth opportunities,giving a tough time to new technologies.

Of new technologies, Plasma offers bright perspectives

SummarySummary

DisplayDisplayComponentsComponents

Philippe CombesPhilippe CombesExecutive Vice President Philips ComponentsExecutive Vice President Philips Components

CEO Business Group Display ComponentsCEO Business Group Display Components